Why Can’t Some CEOs Keep Their Trousers Zipped?

Brian Dunn, the former CEO of Best Buy, has now joined the ignominous ranks of CEOs who’ve allegedly had public affairs with employees and lost their jobs. What causes some CEOs to start to believe the rules don’t apply to them? And is it really the affairs that get them fired?

Last week, Best Buy CEO Brian Dunn initially resigned without explanation, but it quickly became apparent that an affair with an employee was at the heart of the matter. And he may have inappropriately used company funds during the affair — a strong reason for dismissal.

But Dunn is hardly the first CEO to get caught in a scandalous situation.

The last CEO who fell from his throne was Boeing’s Harry Stonecipher. In 2005, it came out that the (married) CEO of the airplane manufacturer was having an affair with a vice-president for operations and commercial activities. Stonecipher admitted the affair to the board who subsequently fired him.

Lewis Platt, Boeing’s Chairman, divulged, “(A)s we explored the circumstances surrounding the relationship, we just found some things that we thought reflected poorly on Harry’s judgement and would impair his ability to lead the company going forward.” The Chairman did note, however, that the affair was not the sole reason for Stonecipher’s dismissal, but he was let go for violating the company’s code of ethics.

The first “great” CEO-office sex scandal involved Bendix Corp.’s Bill Agee and Mary Cunningham way back in the 1980s. Agee didn’t fall because of it; it was his arrogant persona in the company’s fatal merger with Allied Corp. that undid him. Proving that times have changed…somewhat.

As evidenced by Stonecipher and Dunn (and many politicians) there is often a link between power and infidelity which runs through what the Greeks called hubris– a form of arrogance in which the leader comes to believe that the rules that govern other mortals no longer apply to him. In the modern era, we can see evidence of this when CEOs, in former Citi chief Walter Wriston’s phrase, “start to believe their own press releases.” This was Wriston’s response when asked to comment on Jack Welch’s public affair with Suzy Wetlaufer, then editor of the Harvard Business Review. Wriston, a former GE board director, was not impressed with the way Welch conducted the affaire, not least becuase it was Walter’s wife Kathy who years earlier fixed-up Welch on a blind date with Jane Beasley, Kathy Wriston’s personal attorney who worked at Shearman and Sterling at the time. Jane had become Welch’s second wife and was married to him when the affair with Wetlaufer went public.

Many GE board members quietly questioned Welch’s personal judgment. They were accustomed to seeing their leader grace the financial pages, not lurid headline’s on Page Six of the New York Post.

As with most affairs among wayward business leaders it is not the sex that scandalizes but the arrogance and abuse of trust that throws into question the person’s perspective and judgment. As Ross Perot once famously said in another context, “If your wife can’t trust you, why should I trust you.” This article chronicles the connection between power and infidelity, noting that it is not a gender-specific issue. With power comes confidence, a much stronger indication of infidelity than gender.

A psychologist who testified in sexual harassment cases, Laura Brown, told The Seattle Times in 1998 that, “with consensual sex it’s very hard to get fired.” So, CEOs might not get the boot just because of their indiscretions. In many cases, financial performance rather than moral outrage is the ultimate reason that a CEO loses their job after an affair, says The Seattle Times. Best Buy has been struggling, an issue that may have somehow factored into the board’s decision.

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